We take a look at five stocks that have been rising over 5% in the past month, with analyst ‘Buy’ calls.
- Oil And Natural Gas Corp: HDFC Securities maintains its ‘Buy’ rating on this oil & gas exploration & production company with a target price of Rs 169. This indicates an upside of 24.8%. In Q2FY23, the company’s net profit fell 54% YoY to Rs 8,299.4 crore and revenue rose 38.2% YoY.
Analysts Harshad Katkar, Nilesh Ghuge, Akshay Mane and Rutvi Chokshi are positive about the company due to an improvement in crude oil realisations and domestic gas price realisations.
The analysts were also positively surprised by the firm’s standalone Q2FY23 results, as it beat their net profit estimates. They attribute this outperformance to “lower-than-expected statutory levies, lower employee cost, lower depreciation, depletion & amortisation costs and higher other income”. The analysts find the management’s crude oil and gas production guidance for FY23, FY24 and FY25 encouraging. They expect the company’s revenue to grow at a CAGR of 10.6% over FY22-25.
- Hindustan Aeronautics: ICICI Direct maintains its ‘Buy’ rating on this defence company with a target price of Rs 3,300. This indicates an upside of 24.3%. In Q2FY23, its net profit rose 44.2% YoY to Rs 1,221.2 crore despite its revenue declining 7.3% YoY.
Analysts Chirag Shah and Vijay Goel said the firm’s EBITDA margins also grew by 919 bps YoY to 31.5%. They attributed the improvement in profitability and margins to lower other costs and a higher share of revenue contribution from the maintenance, repair & overhaul (MRO) segment.
Shah and Goel believe the company’s revenue growth in the coming quarters will be driven by its healthy order book, which stands at Rs 83,800 crore. They also expect a continuous order inflow in the MRO segment to bolster the order pipeline. The analysts added that “execution of other key orders and sustained growth in MRO will drive revenue growth in double digits from FY25”. They estimate the company’s net profit to grow at a CAGR of 11.8% over FY23-25.
- Bharat Forge: Prabhudas Lilladher reiterates its ‘Buy’ call on this forging company with a target price of Rs 950, indicating an upside of 14.9%. The stock price rose by 6.4% during the past month. The company’s net profit in Q2FY23 fell by 46.2% YoY to Rs 145.9 crore despite a 28.1% YoY rise in revenue to Rs 3,122.3 crore. According to analyst Mansi Lall, the poor performance was caused by high raw material costs and a one-time charge of Rs 13 crore on a defence business.
Bharat Forge won export orders for passenger vehicles and industrial segments, as well as a defence export order worth $155 million for artillery products to be executed over the next three years. Lall said, “The management highlighted that near-term demand for commercial vehicles looks positive in both India and export markets.” She remains optimistic on the back of a “positive outlook for the automotive industry as semiconductor supply issue eases out along with healthy order wins in the industrial space”.
- Bharat Heavy Electricals: ICICI Securities maintains a ‘Buy’ call on this industrial valve manufacturer with a target price of Rs 100, indicating an upside of 38.8%.The stock rose by 5.7% in the past month. In Q2FY23, the company reported a net profit of Rs 12.1 crore, as against a loss in the previous year, while its revenue increased marginally to Rs 5,418.7 crore.
Bharat Heavy Electricals’ order inflow during Q2FY23 stood at Rs 12,000 crore and the total order book now stands at Rs 1.06 lakh crore. Rahul Modi, Ashwani Sharma and Aashna Manaktala said, “Given the addition of new orders with favourable payment terms, we expect execution to gather pace, followed by margin improvement supported by the recent correction in commodity prices.”
The valve manufacturer's trade receivables declined 8% but overall receivables grew 8% YoY. The analysts concluded that Bharat Heavy Electricals’ efforts to improve cash flow and reduce receivables could achieve sustainable and profitable growth.
- Manappuram Finance: Motilal Oswal maintains its ‘Buy’ call on this NBFC with a target price of Rs 140. This indicates an upside of 25.7%. The stock price rose by 7.9% during the past month. In Q2Y23, the company’s net profit grew by 10.4% YoY to Rs 408.4 crore (17% higher than the brokerage’s estimate), while revenue increased 10.3% YoY to Rs 1,714.1 crore. Net interest income improved 9% YoY to Rs 1,080 crore, 6% higher than the brokerage’s estimates.
Analysts Abhijit Tibrewal, Nitin Aggarwal and Parth Desai ask the question: Should the NBFC now change from gold loan growth and margin compression to healthier yields and diversification in the loan book. “We feel Manappuram Finance should tread carefully in the non-gold segments as it is yet to exhibit a clear ‘right to win’ in these segments and strong non-gold AUM growth is also fraught with risks,” they said.
The analysts raised their estimates and model profit CAGR of 13% over FY22-24 by factoring in higher margins in the gold loan segment and moderation in credit costs in the MFI business.
Note: These recommendations are from various analysts and are not recommendations by Trendlyne.
(You can find all analyst picks here)
